Do Financial Incentives Help Low-Performing Schools Attract and Keep Academically Talented Teachers? - Evidence from California - NBER Working Paper 14780

Sep 4, 2026

This study uses a California natural experiment from 2000 to 2002 to assess whether a competitively allocated $20,000 incentive, the Governor’s Teaching Fellowship (GTF), attracts and retains academically talented novice teachers in low-performing schools. Using career-history data for 27,106 individuals pursuing California teaching licenses (1998–2003), it applies an instrumental-variables approach to estimate the causal effect. Results show GTF recipients increased their likelihood of starting in low-performing schools by 28 percentage points, while retention over four years was similar across recipients and non-recipients.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages40

Reading Time1 h 41 min

AccessFree to download

Introduction

Policy context: targeted financial incentives

Incentives in public service professions

Incentives in teaching and related rationale

NBER WORKING PAPER SERIES DO FINANCIAL INCENTIVES HELP LOW-PERFORMING SCHOOLS ATTRACT AND KEEP ACADEMICALLY TALENTED TEACHERS? EVIDENCE FROM CALIFORNIA Jennifer L. Steele Richard J. Murnane John B. Willett Working Paper 14780 [http://www.nber.org/papers/w14780](http://www.nber.org/papers/w14780) NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 March 2009 We would like to thank the William and Flora Hewlett Foundation and the Spencer Foundation Dissertation Fellowship for each funding portions ofthis research. We are also grateful to the California Student Aid Commission (CSAC), the California Commission on Teacher Credentialing (CCTC), and the California State University Chancellor's Office (CSUCO) for providing the data, and particularly to Karen Vogel-Henderson, Catalina Mistler, Steve Caldwell, and Paula Rockwell at the CSAC; Dale Janssen, Marjorie Suckow, and Erin Duff at the CCTC; and Sabine Ghobriel, Daba Asemebo, and Beverly Young of the CSUCO. In addition, we appreciate the insights into the Governor’s Teaching Fellowship provided by Ellen Curtis-Pierce, Philip Curtis, Anita Flemington, and Debby Ford. Portions of this study were presented at the 2007 Fall Conference of the Association of Public Policy Analysis and Management, the 2008 Annual Meeting of the American Economic Association, the 2008 Annual Meeting of the American Educational Research Association, and the 2008 Fall Education Meeting of the National Bureau of Economic Research. We thank Bridget Terry Long, Brian Jacob, Guido Imbens, and Caroline Hoxby for comments on earlier drafts. The views expressed herein are those of the authors and do not represent those of the project sponsors, the RAND Corporation, any of its sponsors, or the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications. © 2009 by Jennifer L. Steele, Richard J. Murnane, and John B. Willett. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. Do Financial Incentives Help Low-Performing Schools Attract and Keep Academically Talented Teachers? Evidence from California Jennifer L. Steele, Richard J. Murnane, and John B. Willett NBER Working Paper No. 14780 March 2009 JEL No. I2,I22,I28 ABSTRACT This study capitalizes on a natural experiment that occurred in California between 2000 and 2002. In those years, the state offered a competitively allocated $20,000 incentive called the Governor's Teaching Fellowship (GTF) aimed at attracting academically talented, novice teachers to low-performing schools and retaining them in those schools for at least four years. Taking advantage of data on the career histories of 27,106 individuals who pursued California teaching licenses between 1998 and 2003, we use an instrumental variables strategy to estimate the unbiased impact of the GTF on the decisions of recipients to begin working in low-performing schools within two years after licensure program enrollment. We estimate that GTF recipients would have been less likely to teach in low-performing schools than observably similar counterparts had the GTF not existed, but that acquiring a GTF increased their probability of doing so by 28 percentage points. Examining retention patterns, we find that 75 percent of both GTF recipients and non-recipients who began working in low-performing schools remained in such schools for at least four years. Jennifer L. Steele RAND Corporation 1200 South Hayes Street Arlington, VA 22202 [jsteele@rand.org](jsteele@rand.org) Richard J. Murnane Graduate School of Education Harvard University 6 Appian Way-Gutman 469 Cambridge, MA 02138 and NBER [richard_murnane@harvard.edu](richard

FAQs

What financial incentive is evaluated in the study?

The study evaluates the Governor’s Teaching Fellowship (GTF), a competitively allocated $20,000 incentive aimed at attracting academically talented novice teachers to low-performing schools and retaining them for at least four years.

How is the study designed to estimate the incentive’s impact?

It uses a natural experiment in California between 2000 and 2002 and applies an instrumental-variables strategy based on career-history data for 27,106 individuals who pursued teaching licenses from 1998 to 2003.

What is the estimated effect of GTF on teachers’ placement in low-performing schools?

GTF recipients would have been less likely to teach in low-performing schools without the program, but acquiring a GTF increased the probability of doing so by 28 percentage points.

Does the fellowship improve retention in low-performing schools?

Retention over at least four years was similar: 75% of both GTF recipients and non-recipients who began working in low-performing schools remained for at least four years.

Sep 4, 2026

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